New Product Elasticity of Demand

New Product Elasticity

Elasticity of Demand for a Build-to-Order Tablet PC

The elasticity of electronics products tends ot move quickly from elasticity to inelasticity as new competing products enter the market, and provide as much if not more functionality than the first generation devices. The rapid degradation of price elasticity in electronics is one of the primary factors that fuel the rapid pace of new product introductions and continual innovation in high tech products (Docters, 23). The intent of this analysis is to evaluate the elasticity of the proposed build-to-order Tablet PC.

Analysis of Elasticity of Build-to-Order Tablet PC

Unlike the traditional personal computer industry, the tablet PC industry is still growing and being differentiated more on benefits and value than price alone. An accurate indicator of a market being highly commoditized and being inelastic is the reliance on price and availability alone as differentiators in selling cycles (Klemperer, 139, 140). High technology products often descend into price inelasticity quickly due to the ubiquity of components, ease of duplicating production processes, and gradual erosion of product differentiation due to an intensive focus on feature and function-based competition (Cette, Gilbert, and Jimmy Lopez, 397).

The proposed build-to-order tablet PC bypasses the pitfalls of traditional high technology products by having several unique, difficult-to-replicate differentiators at the product, process and service level. Based on these differentiators that extend well beyond the product, the pricing strategy will be able to capitalize on a highly price elastic strategy for the first years of the product line's existence.

The product's configurability and customization, down to the screen and electronics enabling it to connect to the Internet at any time, are highly valuable to specific audiences. The processes required to customize the proposed build-to-order tablet PC also are highly differentiated and unique as no one is offering them today. And from a services perspective, the ability to gain access to the Internet from anywhere at anytime without excessive service charges is also a highly differentiated aspect of the proposed product. These three aspects of product, process and service combine to deliver a device that replace multiple substitute products. Another characteristic of highly elastic products is that they have an abundance of substitutes (Klemperer, 141). By combining essential elements from a product, process and service standpoint, both the actual and perceived value of the proposed build-to-order tablet PC increases as well, further sloping the demand curve and making it more elastic.

Conclusion